ASML Holdings (ASML)

UBS Global Healthcare Services Conference

Feb 27, 2012 14:00 PAM ET




Unidentified Analyst

Good morning, I am (inaudible) Hardware Research in London and I am very pleased to have Peter Wennink, CFO of ASML with us today. Obviously we won't recap what ASML is doing because that’s known to everyone and maybe we will start by the topic of the week which is Elpida filing for bankruptcy so maybe two questions, one which is short term, do you have any exposure on our books to Elpida and more you know long term or maybe for H2 because you have been with Eric talking about maybe (inaudible) CapEx spending for Q1. What could happen to the (inaudible) market depending on this scenario for Elpida.

Peter Wennink

Too relevant your questions I would say first more the biggest impact on the company. We have limited receivables outstanding and as a matter of fact we have a prepayment of balance Elpida that is higher than the capacity where we currently have, so that’s okay, we have an immersion tool there on loan which is actually ASML property and also with the relevant document there. So we don’t expect any major exposure from the current situation.

From a market point of view probably more interesting, it's our estimate based on some probably data we think that our own bit supplies to the DRAM model Elpida itself is about 10% of what we believe but the Elpida group which of course includes Rexchip could be 15% and 20% in total.

So, that’s quite a significant part of the DRAM market. I just got information from some of our people that were actually creditors meeting that the whole process that is called rehabilitation process takes about five to six month before you have a final go, no go on that plans of there will be a superiority in which of course there is a lot of uncertainty of what’s going to happen.

Clearly the invention of (inaudible) to continue with the operation as to of the call the whole rehabilitation plan that issue is going to be will that be acceptable, will there be a goal, will there be a no go.

And that will have a significant impact I think on the DRAM market, especially since like I said Elpida itself unless the group of this growth associated, I think 15% to 20% the total bit capacity that could have a significant impact if the plan would not go then you would clearly be in a situation where we currently estimate about 10% of all the capacity in the DRAM business, that would have a significant effect on the balance between supply and demand.

Unidentified Analyst

And that could be a possibility to a certain extent because last time something Pete like this happened it in (inaudible) and the facts will not useful in Europe.

Peter Wennink

And in that particular case why weren’t those facts used for DRAM because at that point (inaudible) at that point was not competitive from the cost point of view, so the tool set that was used in those space was not competitive, if you change the shareholder nothing changed on the comparative point of view. So those tools were also let’s say into the logic market we can remember one effect I think it was in Virginia. We sold to TI and again that’s millimeter (ph) what they use for LF (ph) process.

So actually those tools those tools will find its way if it's not used by dealers so.

Unidentified Analyst

That’s could be even better.

Peter Wennink

If that’s the case then of course you would need additional tools at the leading…

Unidentified Analyst

Okay now if we move on to the order of (inaudible) for each year, it looks like Q3 was could have been the trust last year with a strong recovery in Q4 and order to BF in Q1. How do you feel, we usually felt superiority in the quarter. How do you feel it's like a one month pay down already.

Peter Wennink

I think it's nothing changed as compared to the time when we went out with the fourth quarter results. Our customers gave us enough insights and guidance for us to guide us out for about 2.4 billion of sales in the first six months of 2012 about 1.2 billion in the first quarter. So it's evenly spread. That is a reflection of what their visibility is right now. Orders will follow, we believe to support that level and for the second half of the year it's still uncertain because we are just six weeks I have heard of that when we were at the time of the fourth quarter results and nothing has basically changed, in terms of where we could see things going, first half, logic will be store, so family customers will be strong and as which we will be pay a loss in the second half. Kind of first half of 2012 and that will be to our expectation, if we will run our simulation model based on 77% bit growth.

We think that if the industry needs to support 77% bit growth then NAND will be strongly in the second half than in the first half. Then the big question will be DRAM, now DRAM bit growth is currently the expectation is mid-30s in terms of bit growth in overall percentage which would mean that what we currently have on the books plus what we think we will ship in the first six months of this year could satisfy now the demand, so the big question where DRAM is, is what is the expectation of 2013 for next year.

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